New Netflix Pricing

Here's the new subscription pricing, taken directly from the Netflix help page:

Q: What are the details of your upcoming price decrease? When will my rate change?

A: We are lowering the prices on all subscription programs effective November 1st, 2004.

Our new pricing is as follows:

2-at-a-time, 4 rentals per month: $11.99/month
3-at-a-time Unlimited: $17.99/month
5-at-a-time Unlimited: $29.99/month
8-at-a-time Unlimited: $47.99/month

We will automatically change your billing rate to the new lower price at the time of your November billing cycle. You do not need to contact us to get the new, lower rate.

All members who finish their Free Trial period on or after November 1st, 2004 will automatically receive the new, lower price.

Comments

[badass]

Once again, I think this is the correct move for Netflix and the longer Netflix can pull off this low price the better. I've come to this conclusion in particular because Netflix can beat Blockbuster over time because:
1. Netflix is an online company and they don't have to worry about over 9,000 stores like Blockbuster does.
2. Those 9,000 stores are being affected by all online rentals no matter what company they come from (to some degree including thier own online rental program.)
3. It will cost Blockbuster a lot of money just to make the risky transition to a storewide/online rental business.

Now I will give my reasons for how Netflix could kill themselves:
1. If They fail to adapt into video game rentals(this is huge for survival)
2. If They fail to adapt into adult dvd rentals
3. If They fail to adapt into Music CD rentals (far down the road) *unique to market
3. If They fail to counter the free in-store coupon that Blockbuster has (though this coupon has not totally proven to be effective overtime yet)
4. If They fail to effictively advertise that they are the fastest mailer (listing the facts to thier potential customers about the number of distribution centers and locations compared to their competition). Netflix must find aggressive ways to gain customers through effictive and original advertising that lets their product and business model to be explained to the public in an appealing way.

[Aron]

Well said badass. The recent news has shuck me out and I no longer hold a position.

I agree that the new price is essential given Blockbuster's seemingly rapid progress. I would be optimistic about Netflix vs. Blockbuster. I am not so optimistic about Netflix vs. BB vs. Amazon. I look forward to hearing more from Amazon about their program.

[badass]

Aron: What would happen to the current Netflix stockholders stock if Amazon or Yahoo were to buy Netflix out? Would the Netflix stockholders just lose all their stock or would their stock all the sudden be worth more or what?

Yes . . . bring on the hard core porn . . . please.

[Peter]

badass: "If" Netflix were to be bought by another public company, the standard procedure is to replace the exisiting company's stock with the new company's stock at some predetermined ratio. So exisiting Netflix sharholders would become Amazon or Yahoo shareholders. The ratio "should" be decided so as to make the new shares worth at least as much as the old ones. The board usually won't approve a buyout that causes everyone to lose money.

[Aron]

Stock swapouts seem most common. A cash buyout is also possible. Either way, shareholders of the bought company are generally rewarded a premium as Peter says. A company on a clearly downward track will get much less a premium. There's really no magic - it all sort of fits in with common sense.

[papercut]

The biggest fear of a porn distributor- the product going to the wrong adress...Netflix will NEVER take this risk. It would produce too many lawsuits. The CD industry wouldnt allow rentals either because the lawyers wouldnt allow it.

[Sonja]

Netflix does not need to go into the adult genre. There netflix like sites that do this very thing. Yes it would mean an additional fee per month, but when you measure that against having to purchase an adult DVD you will still save more.